What Is Net Operating Income?

Net Operating Income (NOI) is an important figure to know when purchasing income property.  It is simply gross annual rental income minus expenses (GROSS ANNUAL RENTAL INCOME – EXPENSES).  What can sometimes not be so simple is defining what qualifies as an “expense.”  Here is a list that you can use to define your expenses: … Continued

What Is Cap Rate?

To value apartment buildings, many investors use the direct capitalization technique.  While it is mainly used for commercial real estate, it can also be used on 2-4 unit properties.  The formula is this: V = NOI / R V = VALUE NOI = NET OPERATING INCOME R = CAP RATE The Capitalization Rate (Cap Rate) … Continued

What Is Cash-On-Cash Return?

When purchasing income property, there are many ways of looking at it to see if it is a good investment.  It’s probably a good idea to look at more than just one formula before deciding to purchase a property.  One formula you should at least take a look at is the Cash on Cash Return.  … Continued